AUD/USD is back lower than before the RBA announced its 50 bps rate hike earlier, falling to 0.7170 from a high of 0.7245. You might be wondering, what gives? I shared some thoughts earlier:

"The question for the aussie now is whether or not it can sustain gains and build a more bullish run. I'm still skeptical despite the RBA surprise. A lot of rate hikes are already priced in to the front-end, with cash rate futures expecting the RBA to hike to 3% by February next year. In that sense, the more aggressive tone now is much needed to vindicate that pricing into being a reality.

"For now, the aussie likes what it sees from the RBA but as mentioned earlier going into decision, gains may be fleeting and more tempered with as long as risk sentiment remains more dour on the day.

"US futures are still keeping lower with S&P 500 futures down 0.6% at the moment. The selling in equities alongside the key technical level (100-day moving average at 0.7228) are strong arguments to keep aussie gains in check for the time being."

It's a tough spot for the aussie so long as risk sentiment remains rather iffy and Treasury yields are continuing to surge. That invites more flows into the dollar and will keep risk trades at bay for the most part. The aussie is no exception to that.

Throw in the fact that this "aggressive" 50 bps rate hike merely reinforces what markets had already priced in at the front-end, and you would find that the hawkish undertones are more of a necessity than any general extension from what is priced in.